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These are times that try an asset manager's soul. The world's economy is a soft-paste porcelain vase set on a wobbly plant stand in the heart of an active earthquake zone. The Middle East is sending out foreshocks of war. The South China Sea is a smoking caldera of tension. Social unrest in the EU threatens tidal waves. And, according to the agitated rats and snakes of the financial press, China is headed into a recession.

Meanwhile, in the U.S., where the economy is climbing from its financial crater like an underoxygenated mountaineer, congressional miscalculation threatens to topple the weary cragsman back into the abyss.

Hedging against the most pessimistic case without crippling the upside potential of a better or even miraculous case appears to be as unsolvable as the proverbial Gordian knot. Alexander the Great "solved" the intellectually challenging knot riddle by severing it with his sword. Scott Minerd, chief investment officer of Guggenheim Partners, offers a more reasoned but equally simple solution to the hedging conundrum: gold. In extreme circumstances—like miscalculations regarding inflation by the Federal Reserve—the metal could hit $10,000 per troy ounce, he asserts. Thursday, after the Fed disclosed its latest financial-stimulus scheme, the metal rose about 2% to $1,768.

Most economists aren't forecasting a recession or inflation for the U.S. A sudden acceleration of domestic economic activity leading to a more robust recovery doesn't seem to be in the cards either, assuming that President Obama is re-elected and continues to focus on income redistribution as opposed to job growth.

Martin Regalia, chief economist for the U.S. Chamber of Commerce, says that, based on current patterns, underlined in the most recent employment report from the Bureau of Labor Statistics, a full jobs recovery will take another five years. With growth below 3%, the economy is creating just enough jobs to absorb new entrants into the labor market, not provide work for everyone who was laid off in the 2007-2008 credit-market crash, he says. They number about seven million. Anemic income growth also is a drag. As the nearby charts show, Americans strapped with debt aren't bringing home enough money to significantly reduce their debts. The low rates engineered by the Fed merely make it easier for them to service that debt. So much, then, for a consumer-led recovery.

Regalia worries that miscalculations by a bickering Congress in tackling the $16 trillion federal debt or avoiding the "fiscal cliff" might cause chary foreigners to rethink lending to the U.S. at rates near zero. Absent serious belt-tightening, America probably would inflate its way out of debt. For every 1% increase in rates that would be demanded under such circumstances, $100 billion would be added to the budget deficit. In normal times, the foreign lenders would demand at least 3%, says Regalia.

Minerd frets about the Fed's ability to reduce its swollen $2.9 trillion balance sheet if rates suddenly were to rise. Because the assets have longer-term durations, their market value immediately would tumble. If rates rose 1%, the Fed would have a $150 billion capital deficit, he says. This would have negative ramifications for the dollar. Minerd says the über-wealthy have been migrating toward hard assets like gold, real estate, and art. Every portfolio should be partially composed of such assets, he asserts. Is yours?